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Overstock.com Blockchain Business “tZero” Raises $270 Million

Overstock’s blockchain subsidiary tZero raised $270m from Chinese private equity firm, GSR Capital, in addition to stake in Overstock.com and funding to the tZero ICO. The ICO likely reached their intended goal of $250 million, but an official statement has not been released yet.

tZero

tZero is a full leap into the fintech industry. The platform is host to an alternative trading system for securities and a cryptocurrency wallet in collaboration with another startup called Bitsy. The platform has been in testing phases since 2015

To date, tZERO has the only platform that has ever traded a digital security, and continue to perfect the token trading system for tokenized securities. The company owns two SEC registered and FINRA Member broker-dealers, SpeedRoute LLC, a premier routing and execution firm, and PRO Securities LLC, an Alternative Trading System (ATS). Pro Securities was the first SEC and FINRA regulated ATS to enable and support secondary trading of a crypto security.

tZERO’s Digital Locate Receipt software provides market participants with a more transparent, efficient, and compliant solution for the lending and borrowing of securities. Their trade routing services over 125 broker dealers and offers connectivity, market access, smart order routing, and algorithmic trading solutions. This technology is already supporting 15 to 18 million traditional orders per day, but can scale over 100 million orders per day.

Growing Funding Plan

$270m would be one of the largest single investments in a blockchain startup. The deal is planned to close in December 2018. However, there is $134 million more from GSR spread to the tZero ICO and Overstock.com stock, which surged almost 17% following the announcement of the GSR investment.

In exchange for an 18% stake in tZero’s blockchain-based crypto exchange, GSR purchased a 10% stake in Overstock. 3.1m shares were purchased for $104 million. The shares were purchased at a 5% discount to the closing stock price on August 1st.

For the ICO, $30 million worth of tZero tokens were purchased, bringing the total investment to $404m. This had a massive effect on the overall valuation of tZero, rising to $1.5 billion. The ICO closed last week after opening to the public last December. It was designed specifically with SEC compliance in mind, and was investigated by the regulators earlier this year.

CEO Patrick Byrne was asked what his thoughts on what this huge investment means to tZero and competing platforms, replying that “it means everyone else just lost."